MercoPress. South Atlantic News Agency

US Justice blocks consolidation of meat industry

Brazil's JBS, the world's largest beef producer and owner of JBS-Swift, said on Friday it had abandoned its attempt to takeover of US meat company National Beef Packing Company LLC.

JBS became the No. 3 US beef producer in 2008, when it bought the beef operations of Smithfield Foods Inc, which included beef plants and the Five Rivers Ranch cattle feeding operation. At that time it also tried to buy National Beef, a deal valued at 970 million US dollars, in cash, stock and debt. Since then, the Brazilian company had been in talks with the US Justice Department about selling assets in order to gain approval to buy National Beef. US authorities insisted JBS sell two of its eight North American units so that it did not surpass the size of US food giants Tyson Foods Inc and Cargill Inc, after which "it decided not to go forward with the acquisition". "JBS has made efforts to find a solution with all parts involved, but given the lack of satisfactory conditions, it decided not to go forward with the acquisition" JBS said in a statement. "We fought hard but unfortunately the US Department of Justice wanted to keep us the same size as Tyson and Cargill," said JBS President Joesley Mendonca Batista. The US Justice Department and 13 states had filed a lawsuit in federal court in October seeking an order to stop the proposed deal, arguing it would create the largest US beef packer, slaughtering about 35% of US cattle. US antitrust authorities feared the deal would push down the price that slaughterhouses pay cattle ranchers, as well as raise prices consumers must pay for beef. The complaint filed in US District Court in Chicago said that the major packers -- JBS, National, Tyson and Cargill -- together slaughtered more than 85% of US cattle. "This deal would have substantially injured competition, and would have harmed ranchers and consumers," said Senator Herb Kohl, a Wisconsin Democrat and chairman of the Senate antitrust subcommittee. Earlier on Friday, JBS posted a consolidated fourth-quarter loss of 53.5 million Reales (23 million USD), compared with a loss of 136 million Reales in the year-earlier quarter. "Despite the consumption of beef protein having suffered little change in the past months, the lack of credit for exports has provoked the reduction in stocks in importer countries" JBS said in its earnings report. Earnings before interest, taxes, depreciation and amortization rose 180% to 265.9 million Reales in the three months to end-December. JBS posted a consolidated 2008 net profit of 25.9 million Reales compared with a loss of 165 million Reales a year earlier. JBS has expanded rapidly in recent years with acquisitions of other beef processors in Brazil and abroad. In 2008, the company bought a 50% stake in Italy's Inalca, Australia's Tasman Group as well as Smithfield Food's beef operations. JBS had previously purchased Greeley, Colorado-based beef and pork processor Swift & Co. JBS said it was still difficult to foresee the recovery of consumer confidence under the current global financial crisis but it was prepared to endure a prolonged period of uncertainty.